“Women should be financially independent. It doesn’t matter who your father is, doesn’t matter who your brother is, doesn’t matter who the man in your life is, you need to be responsible for your finances and be financially independent “Priyanka Chopra”

The role of women in society is changing. The number of educated girls is increasing and they are coming out with flying colours in every sphere of life. They are now career-oriented and are being commissioned into Defence & even Flying Combat Aircraft which were once upon a time dominated by males. Indian born Dr Swati Mohan recently led the Mars Mission of NASA.

 It has provided them with the opportunity for financial independence. It is high time women participate in Family’s financial decisions for the following reasons;

 (1)   More life to live- In old age; women largely depend financially on their spouses. But, with the life expectancy of women being higher than men, it is advisable to put in place a separate retirement planning for themselves. (2) Increasing divorce rates – India is witnessing a surge in divorce rates and therefore entrusting the spouse with financial matters can create a money crunch. It is prudent to keep a tab on your monthly investments and determine holdings in your name, so as to avoid financial complications later.

 (3)   Time off for raising children – Many expectant mothers wish to take a time off over and above their maternity leave in order to raise their children, but can’t do so due to financial commitments. Hence, proper planning for financial security can help them to do this.

 (4)   Daughters as sons – Today, more of the daughters are evolving as sons to their families and thus contribute to the family finances. Women, by participating in financial decisions, can become trendsetters by continuing to be an asset to their own family. Today, women have more power and earning potential than ever before.

 Financial Planning Steps:

  Get Clarity on Financial Goals – When you start on the journey of your financial wellbeing, it is important for you and your spouse to take a break and contemplate on what is your shared vision for your family wellbeing. Firstly, a written statement on the Financial Goals with targeted amounts is a good start; it can be broken into short term goals e.g Vacations, Medium Term Goals e.g Children’s education & Buying a house and long-term Goals like Retirement Corpus. Secondly, it gives both spouses an opportunity to really sit and speak on their shared family vision, expectations &interests and helps them to come on the same page on their finances. Lastly this exercise gives a great deal of clarity on their major life goals. 

Budgeting and Savings — There is no easier way to move yourself and your family toward financial freedom than tracking your expenses. Living on a budget is the best way to make sure that you are living within your means. Financial success comes simply from spending less than you earn. Budgeting begins with savings. Set your savings goals first. Set a savings goal of 10% to 25 % of income per month, then plan your spending around the balance. As difficult as it may seem, this strategy can and does work. 

Investing — Once you’ve saved some money, you will want to put that money to work for you. First, set up an emergency reserve account with six months of expenses in Bank FD or Liquid Mutual Funds. Next is Investing for goals. An Investment Adviser can help you to get the best of safety, Liquidity, Return, Tax efficiency and Risk tolerance. The key to your wealth creation is Asset Allocation. Physical assets i.e. Gold and Real Estate are no more providing inflation-beating return. Many households are moving to Financial Assets. Debt categories i.e Bank FD, EPF, PPF, NPS and Debt Mutual Funds can protect your capital but may not provide you higher return. If your goals are long term, it is better to invest in Equity or Equity Mutual Funds. Direct Mutual Funds are still better since these products have nil commission and you get higher returns. But you should diversify amongst asset classes as Warren Buffet tells” Do not put all your eggs in one basket” 

Insurance — Insurance, although not always exciting, is a necessary part of any good financial plan. Vehicle insurance is compulsory but many will happily avoid life insurance or health insurance. How comfortable would you be financially if your husband passes away tomorrow? You should insist that you/your husband have adequate life insurance under married women’s property, disability cover and health insurance for the family. Do not combine investment with insurance. Now a day’s online term insurance are cheaper. 

Nominations – You should ensure that bank accounts, insurance policies, mutual fund accounts have all nominations in your name. Making a will is very simple and you should get involved in making a will for the assets owned by you and your husband. 

Taxes – Spend some time learning about ways to save on your taxes. Get involved in your family’s finances and ways to save on income tax. 

Have a Trusted Financial Advisor stand by you – If you cannot plan your finance by DIY (Do it yourself), it is advisable to seek professional help from a SEBI Registered Investment Adviser. Banks/Distributors/Agents sell regular products having commission but SEBI RIAs help you to buy Direct Mutual Funds which are commission-free products.

For women, we are offering FREE Counselling, FREE Risk Profiling, FREE Financial Health Check-up, and Special Discount on Comprehensive Financial Planning Service and investment Planning till 31st March. You may like to spread this message to your friends and colleagues on this and help them to get financially empowered.